Asking questions about stumbling blocks

A common perception that everything in sales deals comes down to money is simply wrong. A deal has to work for all parties involved, and some of the elements that you need to address are beyond the obvious. If you encounter stumbling blocks, you need to understand what they are and how they’ve arisen. Your role as a new business salesperson is to help your prospect buy from you; to achieve this, you need to understand what’s behind any deal structure issues.

By this stage in the sales cycle, you should have built a strong relationship with your prospect and be able to directly ask what he needs to get the deal done. When you understand from his point of view what needs to happen, you’re in a much stronger position to either deliver on that need or to find a way around it, diffusing the perception of need. In other words: Find the issue, act on it, and either resolve it or make use of the contact reports (see Chapter 3) to show that the issue has been addressed to the prospect’s satisfaction and that there’s no need to reopen it as an issue.

Take money out of the equation if necessary, and make sure that you’ve addressed all the issues. If the solution was free, would he go with it today? If the prospect says yes, then price is the overriding issue and at least you know and can revisit the qualification; if the prospect says no, then help him dig deeper to discover the real issues that are holding up progress. They may be something that is far from obvious, or they may be something you can resolve easily. The point is that unless you ask and dig for the answer, then you won’t know and you allow control to slip away from you.

Use the contact reports to show that any old issues that arise have been covered and agreed on. If a new objection arises, then try to get it into context and ask why it has arisen at this stage. A good way of addressing new issues is to turn them around and ask your prospect how he would handle them. Ask how the prospect’s company deals with whatever the issue is. This can often lead to some very revealing answers, and it isn’t uncommon to hear that the prospect’s company wouldn’t tolerate whatever the objection is. Silence as a response here works well as your prospect contemplates what he’s asking for in terms of his own company policy.

Within the decision-making unit, or even above their heads at the signoff level, issues may exist that are outside your field of vision. The key prospect may have difficulty in selling your solution to management. Part of your role is to support him and provide the necessary ammunition for him to fight and win any internal battles that are needed.

Avoiding discounts

Discounts do drive sales in some circumstances. For example, how often do you see seasonal sales in retail shops? In fact, some seasons have come to be associated with deep discounting, such as Black Friday and New Year sales, and they’re no doubt very effective in driving traffic to retail and online sales establishments, but there’s little or no scope for this in business-to-business sales.

To inexperienced new business salespeople, offering discounts can seem like an easy way to sweeten the deal and get the order in through the quarter-end door, but this situation can quickly deteriorate and become the accepted norm. Don’t let this happen. The following sections explain why you should avoid discounts and how to address requests for discounts.

Balancing risk and reward

In any new business sales situation, a deal is like a seesaw — it can be heavy on one side or the other, or it can be balanced just about equally, which is the optimal position in terms of balancing risk and reward. Too heavily biased in terms of either the buyer or the seller, and it stores up problems ahead. If you believe in your solution, why would you want to structure a deal that doesn’t deliver value to your prospect?

This doesn’t mean that you have to, or even should, agree to any terms that your prospect wants. Be wary of a buyer who wants everything in exchange for nothing, because he has clearly not understood either the value proposition or the sales and customer dynamics. This can be an early warning sign for future problems and should sound the alarm bells.

To strike the right balance for a successful deal, you need to understand your prospect’s motivation — that is, what’s driving him to want your solution and what his pressure points are in terms of doing a deal. You of course already know the budget and sign-off procedures because you qualified them early in the sales cycle (see Chapters 9 and 19 for more about qualification), but has some internal process got in the way? Ask questions that are designed to probe for the real reasons behind any objections (as I suggest earlier in this chapter), because when you understand what you’re dealing with, it becomes much easier to build a balanced deal.

Here are a few methods you can consider to balance a deal:

• Deals don’t always hinge on money, but could you explore some sort of financing deal if that was appropriate? Depending on the size of your company, this may include offering to structure payments over a longer period in exchange for a price premium. My business does offer a pricing deal in this way, and I use it when faced with price issues, which usually go away when the prospect discovers how much more expensive the solution will be if he wants to do a price deal. (I return to payment terms later in this chapter.)
• Trial periods can offer an answer to building a balanced deal, but your solution needs to be relevant for a trial, and all are not. My business sometimes offers a trial period, which we run as a separate project so it has sufficient focus but also to ensure that it has both an end date and a conversion plan to the full service. Trials need to be well defined and to be micromanaged in order to deliver the planned objectives quickly and move on. (I cover contracts for trials later in this chapter.)

• You can try upping the reward element of a deal by introducing some upselling options, especially when faced with demands for more value or reduced cost. Keep the focus on increasing the value proposition, and don’t be afraid to turn the tables and ask your prospect what his own policy is when his prospects ask for discounts. One example is to offer something like an extended warranty, which has a clear value, and include it at close to cost price. This delivers additional value to your prospect while maintaining your solution margin.

  Do be a little wary of introducing upsells, though, because they’re not always welcome, and you may find yourself under pressure to bundle them as part of the original solution price. When used with care and at the right time in structuring a deal, they can be nice profitable additions to a sale.

Using incentives

An incentive program is something that promotes or encourages specific actions or behavior. When used tactically, incentives can stimulate prospects to take the desired action, which should be to move a sale closer to completion or a deal closer to being fully agreed on and signed off. When putting an incentive program together, you need to consider whether the incentive you’re offering does actually cause prospects to take that next step and that it’s related to your solution.

An example of a poorly thought-out incentive program for business-to-business sales is offering a free iPod for salespeople to give to prospects. What would the objective of this be? Apart from giving it to children, what would your prospect do with it? Buying decisions would unlikely be affected, so it would be a waste of money and a wasted opportunity.

In coming up with an incentive program, consider how it could influence each stage of the buying cycle for your prospects and that it’s linked to your solution. Anything outside that definition comes under hospitality, which is another topic entirely and not one I cover in this book.

Your objective with incentives is to add value to the sales and buying cycles and to deliver something of intrinsic value to your prospect. If he can also use that something to further champion your cause internally, then that is an even better goal.

In putting together an incentive, try to avoid being too clever. Your proposition should be clear and concise; otherwise, it risks just adding to the noise level or, worse still, confusing your prospect such that the sales cycle moves backward.

Do you regularly encounter the same type of concerns in structuring a deal? If so, this could be an interesting area to try to incentivize. Here are some examples of effective incentive programs:

• Rewards program for which you perhaps partner with another supplier
• Associated product or service free or heavily discounted
• Extended maintenance or warranty period
• Price freeze for a certain time
• Volume discounts (the only type of discounts you should offer)
• Leasing or other finance deal
• Fast-start program with support to get early results
• Trial periods (which I introduce in the preceding section)

With all these examples, the trick is to keep them as simple and straightforward as possible. If you can’t explain your incentive on a single side of A4 paper or in less than a minute, then it’s too complicated and you risk distracting from the bigger picture of structuring the deal.

When it comes to incentives, you want to avoid artificial deal deadlines. By this, I mean things like “offer ends at 10 a.m. on Monday” unless you have a valid reason for having such a restriction. This is a little controversial because many experts will tell you that having a deadline for action is absolutely the right thing to do because it focuses attention and drives results. I don’t believe it has anything like that effect in business-to-business sales. In fact, the effect can be the compete opposite, and unless you have a real, valid reason for a deadline, don’t make one up because it will turn off a lot of people and irritate a lot more when you want them to be championing your cause internally, not spending time chasing artificial deadlines. If you really insist on having an artificial deadline, then don’t extend it as it passes. You’ll likely alienate lots of prospects with this type of action.

Being creative

To structure a solid deal as a win-win, you need an open and sharing mindset, and you need to understand your prospect’s position before you can really begin to get anything substantial in place. You should of course have already covered all the key issues as part of your ongoing qualification (see Chapters 9 and 19) and should have no nasty surprises in store.

Being in a position as a new business salesperson where you need to close a deal puts you at a major disadvantage. It often leads to you not securing the best deal and is unlikely to even get you to a win-win position if your desperation is obvious to your prospect.

Breaking a deal down into its component parts is a good way to move forward in negotiations. Tick off the items you agree on, and park them as dealt with. To establish a win-win deal, you need to have built trust during the sales cycle and discussed limitations, objectives, and needs along with how to collaboratively reach them. By parking the elements as they’re agreed on, you also protect yourself against a change as the discussions continue.

Be prepared to be creative within the bounds of your authority as you look to build a final solution. Some time ago, I was well into final discussions with a prospect who was well qualified so I understood the real needs and understood budgetary limitations, which were fine for my solution, but I couldn’t get to an agreement to proceed. I was prepared to walk away rather than push for a reluctant deal, but before doing so I asked what it would take to get it to work. It transpired that the prospect was afraid of failure, which was perhaps why he needed our help in the first place, and the thought of committing to what was a sizeable deal for him was holding him back. Having understood the issue, I offered to structure the deal a different way — to introduce a support package so that he had a higher level of support available and to build in monthly reviews with me personally as long as we could do them remotely using Skype or FaceTime. This was going to cost us a bit of money and time, but it wasn’t a big problem for me.

As a final attempt to help, I suggested that we structure the deal as a rolling trial period, one that never really came out of trial so that his maximum commitment at any stage was only one month. This clinched the deal, but in reality all I did was creatively address the issue in another way because our standard contract has a one-month termination clause anyway, so the “clincher” was nothing that wasn’t already there.

That particular prospect went on to be a long-term client, and all his future deals were structured as rolling trials as far as he was concerned. We achieved a win-win solution.

Building a long-term relationship

Some sales cycles are very quick, transaction-oriented ones where little or no opportunity exists to build a relationship, but the majority of business-to-business sales and all complex ones take more time to progress through a sales cycle. In this case, the outcome is often more than a single sales transaction at a moment in time and will result in repeat business over a long period of time, often many years, so time invested in building a relationship with the prospect or client is time well spent.

In addition to putting you in the driver’s seat as far as future new business is concerned, your relationship also ensures a much smoother path through accounts and a variety of other functions in the client’s organization that you’re expected to cover.

You have an opportunity at the beginning of a relationship to set precedent and then expect that it moves forward in the same way. By doing this, you save time on future deal structures and don’t have to reinvent the wheel each time. Establish the way that you expect things to be done and be clear about any implications of actions slipping. Building a long-term relationship enables general issues to be dealt with just once; it also leads to future sales being easier and quicker to conclude as both parties understand the basics and can concentrate on specifics in the future, ensuring that the chances of a win-win solution are enhanced.

You can help both yourself and your new client by documenting steps taken or creating forms and processes to monitor each stage, flagging exceptions for you to work on. This creates added value for your client because it makes his role easier while further cementing your relationship. Done with some care and forethought, something like this can quickly become an accepted norm in your client’s business, meaning that whenever a need arises in that area, you automatically get the order.

In building a long-term relationship, you need to remember that it’s about both give and take and not a one-way street. Cement the relationship further with the perception of more and more added value; things like these can play an important role:

• Loss leaders
• Early access to information
• End-of-life product offers or giveaways
• Additional months on support coverage

Strive to make your relationship more of a partnership of equals rather than a client and supplier agreement. Give your client access to people and information in your company and in your wider network who can provide added value.

Make a point of going the extra mile as a matter of routine. Your goal should be to make yourself invaluable as a trusted partner, and then why would he even consider going elsewhere for solutions that you provide? In addition, when you need to deliver bad news or when a measure of negotiation is required, if you’ve built up sufficient goodwill, it will be a softer blow. Tasks like this should be approached as exercises in engagement rather than bargaining.

Continuing solid reporting and communications

From the very early stages of the sales cycle, you’ll have been producing contact reports, as I outline in Chapter 3, so you have established a clear precedent for doing this. By the time your sales cycle reaches the deal-structuring stage, your prospect will have come to expect and, to a certain extent, rely on them.

As the sales cycle reaches its conclusion and you hopefully move into the implementation phase, your company needs to continue to deliver the same type of documentary audit trail. The information needed will obviously change and will likely be produced by someone else, but as a new business salesperson, you’ve set the bar and your colleagues need to commit to carry through on this.

Proving clear communications throughout both the sales cycle and the implementation phase helps to establish credibility and demonstrates that you’re acting in your prospect’s best interest, which will in turn help to further the relationship into a win-win solution.

All notes and reports are of course documented and stored in the CRM system (see Chapter 9) and are available to colleagues as the project moves forward, ensuring that everyone has access to all the relevant information and that nothing is forgotten about.

The importance of solid and dependable reporting comes to light when a solution contains outsourced work or anything of a creative nature because you often need to provide solid evidence for an audit trail. For example, if you’ve delegated an activity and it hasn’t gone according to plan, you have clear evidence of the lines of responsibility and accountability as you seek to get the issues resolved.

The start of an implementation phase is when new business sales hands over client responsibility to an account manager or a project manager. Your role as the company lead in the deal comes to an end, but having worked hard to establish that you can be relied on to produce solid and accurate reports, you need to ensure that this accountability continues. Your sales responsibility will always be present with the new client, and although you may lose ownership of the day-to-day activities, you need to maintain accountability as you’ll most likely be involved in securing another contract from the client in the future.

Communication is as important as reporting, and as a new business salesperson, at handover time, your responsibility is to ensure that both the new client and your colleagues are all connected at the appropriate level, with the correct introductions made between parties in your prospect’s organization and yours. That way, everyone knows who is responsible for what activities, and regular communication plans, such as email updates and phone updates, are in place before your handover is complete.

Make sure the new client knows that you’re in the loop and are available to discuss any issues as you’re the one who built the relationship and trust. Account managers sometimes resist sales “interference,” but my view is that they’ll have to live with it if it’s my sale, and they’ll have to report to and be accountable to me in the event of any problem. Account managers need to be copied on correspondence, of course, but your objective of securing additional business and their objective of running a project have the potential to be at odds with one another, so ensure that intracompany issues are dealt with out of the new client’s sight.

Making referrals as part of your terms

Referrals work so well as a prospecting tool because they’re backed by personal recommendation and come with inbuilt credibility and inherent trust from a peer. I cover prospecting in detail in Chapter 9, but one of the most effective ways of gaining new prospects is through the power of a referral from an existing client. When you’re structuring the deal is a good time to introduce the fact that you thrive on doing a good job for clients and rely on recommendations to their peers. Don’t be timid in raising this request, and let it be known that it’s something that you’d not only like but expect to be provided with.

Reverse referrals are also an effective way of building a client relationship, where you, from your vast array of contacts due to the very nature of your job, refer people you know to your client. Providing referrals for each other is definitely a win-win deal.

When seeking referrals, you need to be as specific as possible to get the best results, so don’t ask broad questions. Narrow the focus and even have a list of targets that you can ask about being introduced to. Be specific in your request, and accept that if you don’t ask, then you more than likely won’t get. A lot of books cover how to ask for and get referrals, so I won’t go into the techniques here, but do let your new customer know that he should help you in this way. There is no problem with asking a straightforward question like “Who do you know that might benefit from this type of solution, and could you introduce me, please?”

In some cases, a new client may not be comfortable with giving referrals by nature of his personality. Respect this and find another, less direct way that he can be of assistance to you. For example, ask whether he’d be prepared to give a case study or even a client reference. In this case, feed that information back into your marketing department and make sure they follow up on it. (Flip to Chapter 6 for more about marketing matters.)

Some people advocate setting up a referral commission scheme so that anyone providing you with a referral that goes on to result in a sale receives a payment of some kind. This is fine in consumer sales, but I don’t recommend it in a business-to-business environment because it’s too fraught with danger and open to accusations of illegal inducement.

Structuring a guarantee

When deciding how to structure a guarantee, you need to consider exactly what you’re setting out to achieve, because if you don’t understand that, then you may as well try to guarantee the weather. You next need to consider how you can structure your guarantee. Consider the do’s and don’ts I discuss in this section.

First, the don’ts:

• Avoid any form of money-back guarantee because this has the effect of telling your prospects that it doesn’t really matter whether the solution works. It encourages them to try your solution but without any real commitment. A deal to implement a solution without full commitment from a prospect is almost certainly going to fail, and so a guarantee of this type sets you up for failure.
• If you can’t do it, then don’t commit to it. For example, you may guarantee that the solution is so simple to implement that if the prospect can’t do it, then you’ll pay for a third party to do it on his behalf. Something like this risks opening a whole can of worms, and before you know it you’ll have both an unsuccessful implementation and a big bill.
• Stay away from easy-to-deliver guarantees that perhaps don’t hold as much weight in terms of contractual impact. For example, saying things like “I’ll work with you personally” and “I’ll manage our resources to make sure we deliver” aren’t real guarantees and have little real meaning.

Some types of guarantees aren’t worth the paper they’re written on, so if you’re going to guarantee your solution, make the guarantee something that’s worthwhile and that addresses a real and potentially deal-breaking concern. When structuring a guarantee program, make sure it’s realistic, sensible, and achievable.

My business guarantees performance, which helps move deals to completion. The guarantee is simple to understand, realistic, sensible, and achievable and works like this: We guarantee that over a rolling 13-week period, clients will achieve “xyz” results from us. If we fail to deliver those results in that time frame, then we’ll continue working on the project at our cost until the shortfall is made up, and only at that point will we begin charging again. This guarantee is subject to all payments being up-to-date and to clients doing what they’re meant to do, which is specified in the guarantee. Do we ever have to deliver on the guarantee? Yes, on occasion we do, and it’s never a problem because the terms are simple to understand and fair to both parties.

Here are some more do’s:

• Consider what level of buy-in and commitment you need your prospect to commit to. Offering a guarantee of successful implementation is no good if your prospect doesn’t commit any resources to it because it will always end in failure.
• Consider whether the guarantee needs to be conditional or if it’s more binary in nature. To do this, you need to assess the impact to your business of both the likelihood of the guarantee being called on and the effect of delivering on the guarantee.

Knowing that guarantees work both ways

The role of a guarantee in structuring a deal is to help you get to the end game as quickly as possible by taking one or more obstacles out of the equation. Whether the prospect needs a guarantee doesn’t really matter; your confidence in providing it is more important and much more powerful.

Guarantees are designed to reduce the perception of risk in the structure of a deal, but it’s important that you understand the risk of the guarantee being called on and that you don’t leave yourself open to any possible abuse of it.

Don’t allow the fact that the prospect has a guarantee from you to mean that he doesn’t need to be fully committed and engaged with the solution implementation, because he does, and guarantees work both ways. Get your prospect to match your guarantee with one of his own. The idea is to work as a partnership and to reduce the perception of risk, not just pass it on.

For example, you may guarantee that a certain level of individual, usually named, will lead the project for your company and be responsible for ensuring success. You should strive to have an individual in your new client’s company named as being accountable for ensuring that all of the client’s obligations are also met.

Maximizing chances of success

To make sure you maximize the chances of success and build a partnership between yourself and the prospect, you need to gain commitment from all the stakeholders. Just having this type of discussion with your prospect can help build bonds of trust, and sometimes you may discover that it alleviates the need to actually formulate a guarantee.

Consider implementing a trial as I outline in the earlier section “Balancing risk and reward.” Trials can be effective if you follow some simple ground rules. Another element to introduce at the guarantee stage is whether you should provide a premium level of support and, if so, whether it’s at your cost or the prospect’s.

Written terms

Contracts offer mutual protection, and their role is a vital one in business. You need to have, at the very least, a simple written and signed agreement. Contracts should be written in natural language and should avoid jargon. Don’t rely on verbal contracts, which are acceptable in a legal sense but nearly impossible to either challenge or defend should the need arise.

You don’t need to go over the top in terms of order or contract length in the vast majority of cases, as long as all the bases are covered. In most cases, a degree of common sense and a basic understanding of contract law are all that you need to form an order and contract that is clear and unambiguous.

Include a schedule of deliverables and dates or milestones. In other words, set out the individual stages of the solution and attach dates to each stage so that it’s clear when actions are required and expected to be achieved.

Even trial periods need contracts, because they are vital in outlining what’s to be achieved, by whom, and by when and in defining what the scope of the trial is intended to do, along with what happens at the end.

Wherever possible, you should use your contract and not one provided by your prospect. Own and drive this process to completion with the same zeal that won you the business in the first place.

Processes for dealing with changes

The objective here is no surprises. Be aware that changes do occur once an implementation is underway, but you can’t always anticipate what they’ll be. Contractually, you should cover who’s responsible for sorting out the impact of any changes and who’s responsible for the cost of doing so.

For example, you may want to include a clause setting out that any changes to the agreed-on specification that occur after the contract is signed will be charged at a standard hourly rate.

Don’t allow yourself to be bullied into accepting changes made to the contract, either. Be aware of buyer games, especially professional buyers (see Chapter 13), and be prepared to act accordingly.

Absolutely clear payment terms

The number-one reason for failure of business relationships is frustration over payments. Cover payment terms in simple, clear language and have all parties agree to it so there can be no scope for later misunderstanding.

A good mindset to adopt, and one that I do all the time, is one of “we are not a bank.” If the client can’t afford you, then you should have qualified him out long ago, and it’s not your problem to solve. While you’re structuring the deal isn’t the time to be sorting payment schedules because this should have already been agreed on; your role now is to get it implemented.

If you can achieve direct payments on the due dates, then that is the best possible option; if not, then you need to avoid any form of monthly manual sign-off on invoices because this will always eventually lead to delays in payment and the associated frustrations they cause.

Have terms for dealing with late payments and be prepared to enforce them every time. In my business, we operate a three-strikes-and-you’re-out rule. If you mess with payments three times, then you’re now an ex-client. It may be viewed as tough and uncompromising, but as I say earlier, we are not a bank.

Payment in advance or at least in advance for each stage of the implementation is a good target to aim for and should usually be achievable. If the prospect wants the solution, then why would he delay paying for it?